The Goods and Services Tax (GST) Council is considering reducing tax rates on certain items to stimulate consumption while balancing revenue needs, Mint reported, citing sources familiar with the discussions.
The Council may also eliminate the 12 percent slab, shifting items either to the 5 percent or 18 percent categories where necessary. This move aims to simplify the tax structure while providing a consumption boost, according to a source who spoke to Mint on condition of anonymity.
A second source told Mint that the Centre’s recommendations have been placed before a ministerial panel led by Bihar Deputy Chief Minister Samrat Chaudhary. The panel is also considering adjustments that balance tax cuts with revenue requirements, including moving some items to higher tax slabs.
The GST Council had set up the Chaudhary panel in September 2021 to streamline tax rates, resolve classification disputes, and correct tax anomalies. While revenue enhancement was a key objective, driving consumption has now become an additional focus, Mint reported.
As of April 2023, over 600 items were taxed at 18 percent under GST, while around 275 fell under the 12 percent slab and 280 were taxed at 5 percent, according to data from the Central Board of Indirect Taxes and Customs (CBIC). The highest 28 percent slab covers fewer than 50 items.
In January, GST collections hit a nine-month high of Rs 1.71 trillion, up 10.9 percent year-on-year. The highest-ever monthly collection stood at Rs 1.92 trillion in April FY25.
The Fifteenth Finance Commission, chaired by N.K. Singh, previously recommended transitioning from the current four-rate GST structure (5, 12, 18, and 28 percent) to a three-tier system, citing revenue implications from past rate cuts.
Queries sent to the finance ministry and the GST Council Secretariat remained unanswered, Mint said. Moneycontrol could not independently verify the report.
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